Cash Versus the Prepaid Debit Card
Author: weissheiss
If you tend to use cash for most of your purchases, then a prepaid debit card may be a good introduction or reintroduction to the world of plastic.
If you do not carry any plastic cards around with you, you may from time to time experience some difficulties trying to pay for certain things in cash. Good examples of this is trying to buy petrol in an unmanned petrol station or making a purchase over the telephone or online.
Why are you cardless?
There are probably three reasons why you do not use a card:
l personal choice and you just accept any inconvenience as part and parcel of your decision not to use cards;
l you would like a card but feel that it is too easy to overspend, so you try to avoid them to stay in control;
l you would like plastic but find it difficult to get one because of previous credit history issues.
If you fall into the first category then you may have to ask yourself what you are doing reading an article about prepaid cards in the first place! If you are in either of the other two categories, then you may find the facilities available with a prepaid debit card quite interesting.
What it is
A prepaid debit card is a card which works pretty much just like any other card. It carries a logo, for example MasterCard, and can be used in shops, on the internet, at ATMs etc – wherever that type of card is accepted. It differs from a traditional debit card in that it typically is not attached to a bank account. You load cash onto the card and you can then spend up to the value of that amount using it. If you do not want to overspend then you do not overload.
What it is not
A prepay debit card or cash card, as it is often referred to, is not a credit card. There is no credit involved. You can only spend up to the value of money previously loaded on to it so you cannot run up debt and associated interest charges in the way that may be so easy with a credit card. So you stay in control.
A key consequence of there being no credit involved (you are only spending your own money after all) is that no credit check is typically carried out when you apply. So even if you have had previous credit problems, you may still typically qualify for a prepay card.
This could allow you to re-enter the plastic world but without the associated risks of overspending.
To take this flexibility one step further, there are some prepaid debit cards that also offer e-banking facilities providing online access to an account where you can set up standing orders to make regular payments, transfer funds onto your card and have access to electronic statements. You cannot do that with cash!
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